Possible extension of examination settlement authority.

• Position: Tax Executives Institute

On February 13, 1995, Tax Executives Institute submitted the following comments to the Internal Revenue Service's Examination Settlement Authority Task Force, which was formed to review the administrative settlement policy within Examination, Appeals, and Counsel and to recommend to the IRS's Large Case Policy Board changes for improving the system. The IRS task force is chaired by David G. Blattner, Regional Commissioner (Midwest), and David L. Jordan, Regional Counsel (Southwest), both of whom previously served in senior policy and management positions in the National Office.

The Institute's preparation of the comments followed a January 24 meeting with the task force to discuss proposals to extend the Examination function's authority to settle issues. TEI was represented at the meeting by Linda B. Burke, TEI President; Robert D. Adams, Chair of TEI's IRS Administrative Affairs Committee; Michael J. Murphy, Executive Director; and Timothy J. McCormally, General Counsel and Director of Tax Affairs. Before the meeting, TEI solicited the views of its IRS Administrative Affairs Committee, and the supplemental written comments were prepared under the aegis of that committee. In addition to Mr. Adams, the following members of the committee contributed to the development of the Institute's comments: Robert L. Ashby of Northern Telecom Inc., John A. Gurovich of US West, Inc., Sheldon A. Kimel of Brunswick Corp., Lonnie R Nicol of Aluminum Company of America, Richard C. Sammut of Whirlpool Corporation, and Harold N. Weber of General Motors Corporation.

On behalf of Tax Executives Institute, I am pleased to supplement the comments that Mike Murphy, Bob Adams, Timothy McCormally, and I presented to the Examination Settlement Authority Task Force on January 24, 1995. At the outset, TEI commends the IRS for establishing the task force, and appreciates the cordial and open-minded reception the Institute received when we met.

During our meeting, we attempted to lay out a principled case for expanding Examination settlement authority, which in turn will advance case currency. We believe it is critically important how this question - and its solution - is framed. As we see it, there are essentially four approaches to extending the range of issues the Examination function can resolve.

First, the issue may be treated as solely one of definition: how the IRS can better distinguish the resolution of factual issues from the settlement of legal issues. A second...